Elon Musk has put so much of his fortune into X.com that he has just $4 million left worldwide.
This wasn’t the 21st century X.com. It was 1999, the height of the Internet boom. Musk had just sold his first startup, a city guide website called Zip2 — PC maker Compaq needed it for its search engine. Musk earned $22 million from the deal. He didn’t take any risks with his winnings. The 28-year-old South African immigrant spent $18 million building a rather modest idea. X.com was intended to be the online hub for all types of financial transactions in the world.
What did “X” have to do with finances? When people think X, Musk insisted, they think treasure. They think “X marks the spot.” Musk has never wavered in this belief, even when shown plenty of evidence to prove what most people are Really think about it when they see that “X.com” is…porn. His blind love led to a board coup that ousted him as CEO and ultimately forced out the X name – replaced by PayPal.
If, like most of us, you’re still wondering about Musk’s hasty decision to remove the Twitter name (and its multi-billion dollar brand identity), by writing a immense X over it, you begin the basic history of the PayPal mafia. There are surprising similarities between that era, now documented in many best-selling books, and this one. It’s all there: contempt for beloved brands; impulsive decisions that alienated even allies; a great “all apps” vision; and, perhaps most tellingly, investors swooned every time Musk talked about it.
Perhaps that last part is what Musk is counting on now: a desperate attempt to drum up curiosity so that a novel investment will dig the company formerly known as Twitter out of its deepening financial hole. Or the name change could be the result of Musk’s quarter-century of stewing over the loss of X.com purchased from PayPal for “sentimental” reasons in 2017. Either way, there is reason to believe that the sting in this cautionary tale of hubris will strike a second time.
The Story of Muskian X
It must be admitted that Musk was no fool back then. The latest bestseller to tell this story, Jimmy Soni Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valleyhe is not ashamed of Musk’s shortcomings (unlike Elon Musk, a 2017 biography that veers toward hagiography). But even Founders paints a picture of Musk as an extremely hard-working 20-year-old whose fascination with finance provided key insight into the tumultuous process that created PayPal.
Musk, for example, took an early lead in the online payments war between X.com and its rival, a startup called Confinity, which operated out of the same Palo Alto office space.
Not only was Musk quicker to appreciate the value of being able to pay by email (rather than sending them between Palm Pilots, a concept initially championed by Confinity co-founder Peter Thiel), but he also paid X.com users $20 upon registration, while Thiel paid $10. Bleeding money from this competition, the companies were forced to merge in 2000 under the name X.com; Musk would be the largest shareholder of the combined company.
At this point, Musk had everything. Especially after X.com’s first, lesser-known coup. It was here that Musk ousted his hand-picked CEO, Intuit veteran Bill Harris, after Harris had done all the rigid work on the merger. Musk himself took over as CEO. But significantly, he didn’t realize that the most valuable thing he had was his name. The name of the Confinity payment app, a name that eBay sellers love: PayPal.
Founders discusses the creation of the PayPal name in detail and it is worth stopping at this point. Thiel’s team hired a professional naming firm that considered hundreds of options, checked whether they would violate trademarks, and came up with a shortlist that included MoMo, Cachet and PayPal. It took the team a while to figure out that last one, but once they realized it could be a verb – “just pay it to me” – they never looked back.
Although X.com amassed 200,000 users shortly after launch, not one of them said “X is just for me.” Worse still, the pornographic-sounding name attracted, as one early X.com employee put it, “so many terrible, terrible emails.”
Musk didn’t care. Not only was he delighted with how it sounded (and the calmness of his personal sound). [email protected] e-mail address), found “PayPal” too restrictive. “It’s like Apple calling itself Mac,” Musk told Jimmy Soni, the book’s author Founders. X was going to change the financial world, so it had to happen first.
He decided that the payment product in the merged company will be called X-PayPal. According to Max Chafkin, author of the biography of Peter Thiel ControversialMusk “asked the marketing department to redo the PayPal logo to include an X” and “began phasing out the PayPal name altogether.”
Thiel’s team fought tooth and nail against X. A series of focus groups revealed “over and over again the theme of ‘oh my God, I wouldn’t trust this site, it’s an adult site,'” said Soni Vivien Go, X.com’s marketing manager. “It’s rigid to deny it when people say over and over again, in almost the same words, ‘I just wouldn’t trust it. It sounds really mysterious.”
But Musk was adamant. He dealt with the trust issue, then and now, by ignoring it. Then as now, he insisted that engineers rewrite the source code his way and seemed oblivious to the amount of cash the company was wasting. It all served X’s higher vision, which he described to willing investors as “the Amazon of financial services.”
This all led to a second coup at the company’s board, with Thiel calling a meeting to oust his ancient foe while Musk spent a delayed honeymoon with his first wife, Justine. It was icy, but Musk instinctively wanted to cover it up, save face, and continue to promote X.com as a company name, even if he couldn’t win on the PayPal product.
Check out this 2001 CNN report in which Musk makes it seem like it was his decision to pull out and titles the company “X.com, now called PayPal.”
Stop trying to make X happen
Why Musk still thinks he can and will make X happen replacing another iconic brand a quarter of a century later, it remains a mystery. The world has moved on. The online payment networks Apple Pay and Google Pay, not to mention Square, are all most consumers will ever need.
The “all apps” concept embodied by WeChat has not caught on outside China; as of 2019, Mark Zuckerberg tried to replicate WeChat via Facebook Messengerwhich has a much wider audience than Twitter ever had, and it failed miserably.
Musk did not provide any details about the upcoming Service X or answer WeChat’s question. When Twitter employees questioned “fundamental differences” between Twitter and WeChat in November, According to Novel York TimesMusk said the interrogators didn’t know what they were talking about and moved on.
However, it seems more likely that Musk, surrounded by a bubble of supporters of solutions such as X.com veteran David Sacks, does not have as robust an understanding of the gaps in the technology market as he thinks. He also once again fails to understand how much distrust he has sown among his user base.
But if Musk’s stubborn past is any guide, he’ll drive Concept
If, thanks to the latest twist in the X.com saga, the billionaire is left with just $4 million again, the irony will be indescribable. Perhaps in that case Musk believes we all live in a simulation deserves a different look.
